USPS Reform Bill Aims to Strengthens Finances but May Muddle Workers’ Health Benefits
The latest postal legislation, the 2021 United States Postal Reform Bill, aims to help the United States Postal Service find a financial path forward that is stronger and more transparent with the public. After it was introduced to the Senate last week, there has been some backlash brewing about the potential the bill will disproportionately impact health insurance benefits for federal workers. The bill, which is backed by bipartisan support, is the first major legislative effort in helping the agency recoup some of its financial downfalls.
Two of the major tenets of the bill include eliminating pension pre-funding restrictions and integrating the Medicare system for retirees and current employees’ health care coverage. Another new element of this bill is the requirement that the USPS will create an online dashboard that will make it easier for customers to track packages and shipments. This postal reform has garnered the support of Democrats and Republicans alike with Rhode Island Senator Jack Reed explaining that these two moves alone will allow the USPS to save roughly $46 billion over the next decade. Reed points out that the bill aims to do what the previous administration failed to do. Reed explains, “Donald Trump was wrong to try to weaken the Postal Service, and now we have a bipartisan plan to modernize, strengthen and sustain it for years to come. We must put it on sounder financial footing, and we must do it in a way that enhances services and delivers for taxpayers, postal workers, and customers.”
While some lawmakers are optimistic about the bill, others worry about the potential risks it will pose to federal workers. While the main focus of the bill is to help the USPS find its financial footing, many employees and employee advocacy groups worry about the financial implications that employees will now take on, especially when it comes to their health benefits. In its current state, the bill includes drastic changes to the Federal Employee Health Benefits Program (FEHBP).
Through this program, around 8 million federal and postal workers and retirees, along with their family members, have access to health insurance. The main change requires that the FEHBP program would be split into two and would offer separate health benefits for USPS employees and retirees. The concern is that by splitting the program, the riskier pool of participants would face higher premiums. Under FEHBP, premiums are determined by how many times its participants received medical services in the year and how much those services cost. With older members being more at risk, this could lead to higher premiums for those who are retired or are getting ready to retire. The new bill also stipulates postal workers who reach the age of 65 are to enroll in Medicare parts A and B. While Medicare will cover prescription costs and initial hospital costs, the postal service will be the secondary payer. The concern comes in for those individuals who choose not to enroll in Medicare. If they remain in FEHBP, their premiums will likely go up because of the reality that individuals who are eligible for Medicare but choose not to enroll in it are typically the most expensive employees to cover.
John Hatton, the legislative director of the National Active and Retired Federal Employees (NARFE) explains, “Those costs to the FEHB program are much higher than average, and premiums are based on average costs. If you’re pulling out people who are less costly to insure and keeping those others who are more in the FEHB side, it could cause an increase in premiums.”
Not all are convinced that this legislation will have such an adverse effect on federal workers and lead to higher premiums. A senior Democratic aide on the House Oversight Committee shared with the news outlet Federal News Network, “We see integrating postal workers more fully into Medicare as a vital component of putting the Postal Service on a more sound, long-term financial footing.” The aide adds, “The committee is aware of concerns about the effect this could have on the Federal Employee Health Benefits Program and takes them very seriously. We will be working with the Office of Personnel Management and the Postal Service to address this issue, if necessary, as the bill moves to the floor.”
Ken Thomas, the National President of NARFE, shared a letter with the Committee on Homeland Security and Governmental Affairs. In the letter, he expresses concerns about the legislation and urges the members to reevaluate potential consequences including workers losing access to their primary care physicians, the need to switch insurers, and the higher premiums that may arise for workers and retirees. The letter pushes back stating, “If Congress allows USPS to have its own health insurance risk pool, the Postal Service should assume responsibility for all of its employees and retirees.” It goes on to read, “moving forward with such cherry-picking sets a dangerous precedent for future changes to the FEHB program. As the committee with jurisdiction over not only the Postal Service but also the FEHB program, we urge caution in taking this path.”
The bill was introduced to the Senate last week and will likely become legislation, making it one of the major changes the USPS will have undergone within the past decade.
